Professional Indemnity Insurance for Limited Companies
Limited companies have different PI requirements than sole traders. Directors' liability, business structure, and corporate exposure require tailored coverage.
Why Limited Companies Need PI
Limited companies (Ltd or LLP) need PI as corporate entity. The company, not the director, is named defendant. Policy covers company liability, not personal director liability (separate directors' & officers' insurance covers that). Many clients require evidence the company carries PI before contracting. Insolvency risk is high if a claim exceeds available assets—proper PI limits protect continuity.
Corporate vs. Director Liability
PI covers company's professional negligence. Directors' & Officers' liability covers personal liability of directors (breach of duty, wrongful trading, regulatory action against director personally). You need both: PI for company errors, D&O for director decisions. Combined premium is typically 15-20% higher than PI alone. Many policies bundle both for mid-size firms.
Minimum Cover Based on Turnover
£250k-£1m: suitable for turnover under £500k. £1m-£2m: standard for £500k-£2m turnover. £3m-£6m: recommended for £2m-£10m turnover. £6m+: typical for larger firms. Match your cover to client exposure. If largest client project value is £2m, minimum cover should be £2m. Some contracts specify minimum—don't underinsure relative to contractual obligations.
Multiple Directors and Liability Structure
Single director Ltd faces personal liability if company can't pay claim (though limited liability provides some protection). Multiple directors dilute individual risk but all are potentially liable for negligence. Ensure PI specifically covers all directors and employees acting in professional capacity. Some policies exclude office staff; clarify who's covered.
Related Entity and Group Coverage
If your Ltd has subsidiary companies or sister companies, standard PI covers only the named entity. If you work across multiple companies, you need extension or multi-entity policy. This matters for holding companies or group structures. Clarify with insurer whether all entities are covered or only principal trading company.
Transferring PI When Changing Business Structure
Changing from sole trader to Ltd, or from Ltd to LLP, requires new PI policy. Existing policy doesn't automatically transfer. Start new policy before change takes effect. Consider retroactive cover extending back to pre-Ltd operations. Run-off cover for old structure ensures claims on pre-Ltd work are covered.
Get PI Insurance Quote"Limited liability protects your personal assets. Professional indemnity protects your business assets."
— Corporate Risk Advisor
Frequently Asked Questions
Standard PI covers employees acting in professional capacity. Ensure policy explicitly includes all staff. Some policies exclude admin or exclude by default.
Active PI ends when company dissolves. You need run-off cover (6-12 year tail) covering claims on past work. Cost is typically 50-100% of annual premium.
One PI policy covers all services if they're all professional services. If one division is separate (e.g., product sales vs. services), ask if extension needed.
No, you need new corporate policy. Old policy covers you as individual; new policy covers the Ltd entity. Retroactive cover bridges any gap between structures.
£400-1,500/year for turnover under £1m. £1,000-3,500 for £1-5m turnover. Established claims-free companies get better rates.